UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): DECEMBER 21, 2004
IAC/INTERACTIVECORP
(Exact name of Registrant as specified in charter)
DELAWARE 0-20570 59-2712887
(State or Other (Commission File (IRS Employer
Jurisdiction Number) Identification No.)
of Incorporation)
152 WEST 57TH STREET, NEW YORK, NY 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 314-7300
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
|X| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01 OTHER EVENTS.
On December 21, 2004, IAC/Interactive ("IAC") announced that its Board of
Directors has approved a spin-off plan to separate IAC into two publicly
traded companies: (1) Expedia and (2) IAC.
The transaction is subject to a number of conditions including final
approval by IAC's Board of Directors of transaction specifics, receipt of
a tax opinion of counsel and the filing and effectiveness of registration
statements with the Securities and Exchange Commission. In addition, it is
expected that IAC stockholder approval will be required. The proposed
spin-off is expected to be completed in the second quarter of 2005.
Attached hereto as exhibit 99.1 and incorporated by reference herein is a
copy of the press release issued today.
Attached hereto as Exhibit 99.2 and incorporated by reference herein is a
copy of a letter to IAC's shareholders.
Attached hereto as Exhibit 99.3 and incorporated by reference herein is a
copy of an Employee Questions and Answers sheet.
Attached hereto as Exhibit 99.4 and incorporated by reference herein is a
copy of an email to employees from Barry Diller.
Attached hereto as Exhibit 99.5 and incorporated by reference herein is a
copy of an email to employees from Dara Khosrowshahi.
The information in the attached documents refers to certain non-GAAP
measures. The text beneath the heading "IAC'S PRINCIPLES OF FINANCIAL
REPORTING," as set forth in IAC's current report on Form 8-K, filed with
the Commission on November 3, 2004, is incorporated by reference herein.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit 99.1 - Press Release, dated December 21, 2004, issued by IAC.
Exhibit 99.2 - Letter to Shareholders, dated December 21, 2004, issued by
IAC.
Exhibit 99.3 - Employee Questions and Answers, dated December 21, 2004,
issued by IAC.
Exhibit 99.4 - Email to Employees from Barry Diller, dated December 21,
2004.
Exhibit 99.5 - Email to Employees from Dara Khosrowshahi, dated December
21, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
IAC/INTERACTIVECORP
By:/s/ Gregory R. Blatt
-----------------------------------
Name: Gregory R. Blatt
Title: Senior Vice President and
General Counsel
Date: December 21, 2004
EXHIBIT INDEX
Exhibit 99.1 - Press Release, dated December 21, 2004, issued by IAC.
Exhibit 99.2 - Letter to Shareholders, dated December 21, 2004, issued
by IAC.
Exhibit 99.3 - Employee Questions and Answers, dated December 21, 2004,
issued by IAC.
Exhibit 99.4 - Email to Employees from Barry Diller, dated December 21,
2004.
Exhibit 99.5 - Email to Employees from Dara Khosrowshahi, dated December
21, 2004.
Exhibit 99.1
Filed by IAC/InterActiveCorp
Pursuant to Rule 425
Under the Securities Act of 1933
Deemed filed and Rule 14a-12
Under the Securities Exchange Act of 1934
Commission File No. 0-20570
[IAC/INTERACTIVECORP LOGO]
IAC ANNOUNCES PLAN TO SEPARATE INTO TWO COMPANIES
TRAVEL BUSINESSES TO BECOME PUBLIC COMPANY CALLED 'EXPEDIA'
NEW YORK, NY - DECEMBER 21, 2004 - IAC/InterActiveCorp announced today that its
Board of Directors has approved a plan to separate IAC into two publicly traded
companies:
o Expedia, which will include the domestic and international operations
associated with Expedia.com, Hotels.com, Hotwire, TravelNow.com,
Activity World, HotelDiscount.com, Condosaver.com, AllLuxuryHotels.com,
Anyway.com, eLong, TV Travel Shop, Expedia Corporate Travel, Classic
Custom Vacations, and TripAdvisor; and
o IAC, which will include the domestic and international operations
associated with IAC's Ticketing business, including Ticketmaster,
ReserveAmerica, TicketWeb and MuseumTix.com; Electronic Retailing
business, including HSN, HSN.com, HSE 24, America's Store,
Improvements, and 9Live; Financial Services and Real Estate, including
LendingTree, RealEstate.com, GetSmart, iNest, and Domania; Local and
Media Services, including Citysearch, ServiceMagic, Entertainment
Publications, and Evite; Personals, including Match.com and uDate;
Teleservices, including Precision Response Corporation, Access Direct,
and Hancock Information Group; and Interval International.
IAC will retain the Company's VUE securities, outstanding indebtedness and
preferred stock obligations, as well as substantially the Company's cash.
Expedia will be appropriately capitalized.
Barry Diller will remain as Chairman and CEO of IAC. Mr. Diller will also serve
as Chairman of Expedia and its senior executive; and Dara Khosrowshahi, who the
company previously announced would become President and CEO of IAC Travel, will
serve as CEO of Expedia. Victor Kaufman will remain as Vice Chairman of IAC and
will also serve as Vice Chairman of Expedia.
SEE IMPORTANT NOTES AT END OF RELEASE
Related to this announcement, Mr. Diller released a Letter to Shareholders
(attached) outlining the background and rationale for this development.
The transaction is anticipated to take the form of a reclassification of IAC
shares, with the holders of IAC stock receiving a proportionate amount of
Expedia stock in a tax-free transaction.
It is contemplated that outstanding IAC stock options and restricted stock units
held by IAC employees will be converted into options or restricted stock units
of the company (either IAC or Expedia) with which each employee remains
following the transaction. Appropriate adjustments will be made to all awards so
that pre-transaction value will be maintained immediately following the
transaction. Mr. Diller's IAC stock options will be converted to options in both
IAC and Expedia, with exercise prices adjusted on a proportional basis based on
the relative trading value of each company following the close of the
transaction. Mr. Kaufman's outstanding equity will be treated the same as Mr.
Diller's.
The transaction is subject to a number of conditions including final approval by
IAC's Board of Directors of transaction specifics, receipt of a tax opinion of
counsel and the filing and effectiveness of registration statements with the
Securities and Exchange Commission. In addition, it is expected that IAC
stockholder approval will be required. The proposed spin-off is expected to be
completed in the second quarter of 2005.
IAC will audiocast a conference call with investors and analysts discussing the
transaction on Tuesday, December 21, 2004, at 11:00 a.m. Eastern Time (ET). The
live audiocast is open to the public at HTTP://WWW.IAC.COM/INVESTORS.HTML.
###
ABOUT IAC/INTERACTIVECORP
IAC operates leading and diversified businesses in sectors being transformed by
the internet, online and offline... our mission is to harness the power of
interactivity to make daily life easier and more productive for people all over
the world. To view a full list of the companies of IAC please visit our website
at HTTP://IAC.COM.
CONTACT INFORMATION:
IAC Corporate Communications
Deborah Roth / Andrea Riggs
(212) 314-7254 / 7280
IAC Investor Relations
Roger Clark / Lauren Porat
(212) 314-7400
2
SUPPLEMENTAL FINANCIAL INFORMATION AND RECONCILIATIONS TO NON-GAAP MEASURES(a)
($ in millions, rounding differences may exist)
BUSINESSES COMPRISING EXPEDIA (POST-TRANSACTION)(b)
12 Months
Ended
9/30/04
---------
Revenue (on a comparable net basis) $ 1,825
Operating Income $ 404
Plus: amortization and merger costs 145
---------
Operating Income Before Amortization $ 549
---------
- ------------------------------------------------------------------
BUSINESSES COMPRISING IAC (POST-TRANSACTION)(c)
12 Months
Ended
9/30/04
---------
Revenue $ 4,239
Operating Income $ 326
Plus: amortization and merger costs 203
---------
Operating Income Before Amortization $ 529
---------
- -----------------------------------------------------------------
CORPORATE EXPENSE
12 Months
Ended
9/30/04
---------
Operating income/(loss) $ (286)
Plus: amortization and merger costs $ 201
---------
Operating Income/(Loss) Before Amortization $ (86)
---------
- -----------------------------------------------------------------
(a) Data is for informational purposes only, and does not reflect all of
Expedia's costs of doing business, including certain pro forma and other
adjustments for items such as non-cash compensation related to Expedia
employees that is currently recorded at IAC Corporate. Allocations and pro
forma adjustments will be finalized and reported in future company filings.
In addition, certain revenue amounts which were historically eliminated in
consolidation will no longer be eliminated, such as revenues for services
provided by PRC to Expedia. For this reason, the combined revenue presented
for Expedia and IAC is slightly greater than the consolidated revenue
presented in historical financial statements.
(b) After the transaction, Expedia will include the domestic and international
operations associated with Expedia.com, Hotels.com, Hotwire, TravelNow.com,
Activity World, HotelDiscount.com, Condosaver.com, AllLuxuryHotels.com,
Anyway.com, eLong, TV Travel Shop, Expedia Corporate Travel, Classic Custom
Vacations, and TripAdvisor.
(c) After the transaction, IAC will include the domestic and international
operations associated with IAC's Ticketing business, including Ticketmaster,
ReserveAmerica, TicketWeb and MuseumTix.com; Electronic Retailing business,
including HSN, HSN.com, HSE 24, America's Store, Improvements, and 9Live;
Financial Services and Real Estate, including LendingTree, RealEstate.com,
GetSmart, iNest, and Domania; Local and Media Services, including
Citysearch, ServiceMagic, Entertainment Publications, and Evite; Personals,
including Match.com and uDate; Teleservices, including Precision Response
Corporation, Access Direct, and Hancock Information Group; and Interval
International.
3
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include statements relating to IAC's anticipated financial
performance, business prospects, and similar matters, and/or statements preceded
by, followed by or that include the words "expects," "anticipates,"
"contemplates," "intends," "plans," or similar expressions. These
forward-looking statements are based on management's current expectations and
assumptions, which are inherently subject to uncertainties, risks and changes in
circumstances that are difficult to predict. Actual results may differ
materially from those suggested by the forward-looking statements due to a
variety of factors, including the risks inherent in separating Expedia from IAC;
costs related to the proposed transaction; changes in business, political, and
economic conditions due to the threat of future terrorist activity or otherwise;
future regulatory and legislative actions and conditions affecting our operating
areas; actions and initiatives by current and potential competitors; the ability
to expand into and successfully operate in international markets, and other
risks described in IAC's filings with the Securities and Exchange Commission
(the "SEC). Other unknown or unpredictable factors also could have material
adverse effects on IAC's and Expedia's future results, performance or
achievements. In light of these risks, uncertainties, assumptions and factors,
the forward-looking events discussed in this press release may not occur. You
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date stated, or if no date is stated, as of the date
of this press release.
IAC is not under any obligation and does not intend to make publicly available
any update or other revisions to any of the forward-looking statements contained
in this press release to reflect circumstances existing after the date of this
press release or to reflect the occurrence of future events even if experience
or future events make it clear that any expected results expressed or implied by
those forward-looking statements will not be realized.
ADDITIONAL INFORMATION
In connection with the proposed spin-off it is currently expected that IAC will
file a proxy statement/prospectus with the SEC. Stockholders of IAC are urged to
read the proxy statement/prospectus, when it becomes available, because it will
contain important information about IAC, the proposed spin-off transaction and
related matters. Investors and security holders can obtain free copies of the
proxy statement/prospectus when it becomes available by contacting Investor
Relations, IAC/InterActiveCorp, Carnegie Hall Tower, 152 W. 57th Street, 42nd
Floor, New York, NY 10019 (Telephone: (212) 314-7400). Investors and security
holders can also obtain free copies of the proxy statement/prospectus and other
documents filed by IAC and Expedia with the SEC in connection with the proposed
spin-off transaction at the SEC's web site at WWW.SEC.GOV.
In addition to the proxy statement, IAC files annual, quarterly and current
reports, proxy statements and other information with the SEC, each of which
should be available at the SEC's web site at WWW.SEC.GOV. You may also read and
copy any reports, statements
4
and other information filed by IAC at the SEC public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information.
IAC and its directors, executive officers and certain members of management and
other employees may be deemed to be participants in the solicitation of proxies
of IAC's stockholders to approve the proposed spin-off transaction. Such
individuals may have interests in the transaction as described herein, including
as a result of current holdings of options or shares of IAC's stock and future
holdings of options or shares of Expedia's stock, which will be impacted in the
transaction. Information regarding IAC and the equity interests of its directors
and officers who may be deemed to be participants in the solicitation of proxies
is contained in IAC's proxy statement, filed with the SEC on April 29, 2004.
As filed with the SEC December 21, 2004.
5
Exhibit 99.2
Filed by IAC/InterActiveCorp
Pursuant to Rule 425
Under the Securities Act of 1933
Deemed filed and Rule 14a-12
Under the Securities Exchange Act of 1934
Commission File No. 0-20570
[IAC/INTERACTIVECORP LOGO]
LETTER TO SHAREHOLDERS
This letter is intended to explain and give context to our actions. We believe
greater value can be created in the configuration we announce today than any
other, and from this all else flows. This is entirely an elective...there is
nothing else that pushed us, no transaction, no inherent worry that led us to
take this course at this time.
In the nine years since the creation of IAC, we have acquired and built a great
collection of businesses, in categories comprising the lion's share of
interactive commerce, each business with its own compelling story of success and
growth. In a way you could say we are the victims of our own success. HSN,
Ticketmaster, and Match.com, for example, have each grown very substantially
since we acquired them. And, while still embryonic, our Financial Services and
Local businesses - including LendingTree, RealEstate.com, Citysearch,
ServiceMagic, Entertainment Publications, and Evite -- are poised for similar
great growth.
One of our most compelling successes has been our travel business, which started
in 1999 with our small acquisition of Hotel Reservations Network (now, of
course, Hotels.com), followed in 2001 by our acquisition of a controlling
interest in Expedia when that business was a fraction of its current size. Those
businesses have had tremendous growth...to the point where they now represent
over 50% of IAC's earnings, and dwarf each of our other operations. Many of
those, standing on their own, have real import and significance but are
considered irrelevant in the current construct.
The result of our success in travel, and its present overweighting, is that IAC
is viewed by the world as a Travel Company. While anyone who doubts that we love
the travel business would be wrong, we've come to discover that this perception
actually hinders the ability of our company to grow, both outside travel and
inside of it. Outside travel, it hinders growth through acquisition because
non-travel companies generally don't want to accept what they view as a travel
stock. Inside travel, acquisition growth, already hindered without a pure travel
currency, would amplify IAC's imbalance, making it even harder for us to grow
outside of travel.
For the company and our shareholders these are negative consequences we want to
correct. We had hoped that our natural progress over time would ameliorate this,
but
given the size of our travel business and the growth in travel we anticipate, we
can't count on our ability to 'balance' IAC by our own hand in the near future,
either through acquisition or internally.
So I'm convinced, and our Board is convinced, that separating IAC into two
companies is the right course...
EXPEDIA will be large and growing, the world's leading online travel company
with the mission of becoming the largest provider of travel in the world.
Expedia will generate significant cash and have its own security, enabling it to
participate with full flexibility in the ongoing evolution and likely
consolidation in the travel category.
The online travel business has grown and matured since we entered it, with the
concomitant attraction of strong competitors ... horizontal, vertical, and the
new word 'meta.' This of course brings a variety of challenges, along with great
opportunities, as the matrix of relationships among suppliers, intermediaries,
distributors and consumers works itself out. It requires complete focus and
nimbleness to maneuver in this environment, along with the flexibility that
comes from a pure currency. In the new configuration, Expedia will have the
chance to grow every which way, according only to the demands of the marketplace
it serves, without any of the gating concerns that are inherent in being part of
IAC. Our travel business, with the leadership positions it has built in the U.S.
and internationally, is in an incredibly strong position to meet these
substantial challenges and opportunities...and it will be best served unleashed
and empowered as a stand-alone entity.
IAC, post-transaction, will be a diversified interactive commerce company, with
a mix of established and embryonic businesses, united by a spirit of opportunism
and entrepreneurship. IAC will be excellently capitalized and perfectly
positioned not only to grow its existing businesses, but to identify and pursue
young or underappreciated interactive companies with strong growth
potential...something our history shows is one of our real attributes.
We don't believe the interactive revolution is over, to say the least; we
believe big opportunities will continue to be available to companies and
management teams able to spot real potential for growth and seize it, and that
playing with one hand tied behind our back as the next phase of internet growth
and convergence unfolds would be intolerable.
This transaction really is a simplifying event. Expedia will become a very
straightforward company post-transaction, and I believe in that configuration
its size and dominance will be much more positively seen than currently. For
IAC, our complexity would be reduced and our clarity as a balanced and
diversified interactive commerce company will come through - until of course, we
again happily find a business whose growth and dominance in a category far
outweighs all else, and then the entity and our shareholders are best served for
it to be set free.
2
At both IAC and Expedia, the result of the split will be closer alignment of
employee performance and shareholder returns, which we believe will energize
both sets of employees.
And at both IAC and Expedia, I couldn't be more enthusiastic about the key
leaders and their talents. Dara Khosrowshahi is perfectly suited to be the CEO
of Expedia the public company; and he has a superb collection of managers, as
IAC has a similar group of great talent.
At both companies we'll continue to take every advantage from the collection of
businesses under each roof - people movement; exchanging best practices and
lessons learned; cost savings from strategic sourcing and other initiatives;
sharing traffic and other beneficial inter-company arrangements. We've made real
progress here since the buy-in of our public subsidiaries one and one-half years
ago...and over time I have no doubt that we'd see more and more benefit from
cross-company activities. In finalizing the split, we'll preserve, as much as we
practically can, the benefits of the interrelationships between the IAC
businesses and the Expedia businesses. We do intend to put in place strong
commercial relationships between IAC and Expedia, and yes, some of the easy
benefits of operating as one enterprise will be given up, but we believe the
advantages of separation far outweigh all else.
Another benefit of the transaction is that our current and prospective
shareholders will get enhanced visibility into both companies. I imagine that
some hearing today's news may wonder whether the split of the companies is
simply an elegant (or not so elegant) casting away of our travel businesses as
the competition in that sector increases. I can tell you my answer directly: it
is not. And believing as strongly as I do in the prospects of both companies, my
equity holdings will be treated the same as that of our shareholders and will be
split proportionately between the two companies, with each company ultimately
representing a very substantial portion of what I have worked long and hard to
accumulate. Finally, I intend to be a most active Chairman at Expedia, in
addition to serving as both Chairman and CEO of IAC...people who would worry
about 'how my time is divided' should understand that with my equity balanced
and given my current daily involvement in all of IAC's current businesses, this
transaction ought to provide enhanced focus on each entity - and I'm very
excited and energized by the opportunities in both.
With apologies to making any claim, one of the defining attributes of IAC, since
the beginning, has been a refusal to be constrained by conventional
wisdom...believing instead that a willingness to change - to 'turn on a dime' --
without being hostage to the past or any other consideration where we see
opportunity, is a great way to create great value.
Separating the Company into two businesses will allow IAC to do what it does
best, and Expedia to pursue its pure mission as a travel company. It is, I
believe, exactly the right move at this moment in our history and evolution.
3
Often the most obvious solutions are elusive, and this one came upon us, first
as a revelation that instinctively seemed just right - both freeing and
energizing, followed by an intensive examination to find any flaw - and then,
after finding none, a great desire to get on with it. Now, having made the
announcement in the ending days of 2004, all my colleagues will be organizing
themselves to start the new year with a fresh, clear and invigorating mandate
for the future - as good a holiday present as we could hope to give to ourselves
and our shareholders.
Barry Diller
4
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include statements relating to IAC's anticipated financial
performance, business prospects, and similar matters, and/or statements preceded
by, followed by or that include the words "expects," "anticipates,"
"contemplates," "intends," "plans," or similar expressions. These
forward-looking statements are based on management's current expectations and
assumptions, which are inherently subject to uncertainties, risks and changes in
circumstances that are difficult to predict. Actual results may differ
materially from those suggested by the forward-looking statements due to a
variety of factors, including the risks inherent in separating Expedia from IAC;
costs related to the proposed transaction; changes in business, political, and
economic conditions due to the threat of future terrorist activity or otherwise;
future regulatory and legislative actions and conditions affecting our operating
areas; actions and initiatives by current and potential competitors; the ability
to expand into and successfully operate in international markets, and other
risks described in IAC's filings with the Securities and Exchange Commission
(the "SEC). Other unknown or unpredictable factors also could have material
adverse effects on IAC's and Expedia's future results, performance or
achievements. In light of these risks, uncertainties, assumptions and factors,
the forward-looking events discussed in this press release may not occur. You
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date stated, or if no date is stated, as of the date
of this press release.
IAC is not under any obligation and does not intend to make publicly available
any update or other revisions to any of the forward-looking statements contained
in this press release to reflect circumstances existing after the date of this
press release or to reflect the occurrence of future events even if experience
or future events make it clear that any expected results expressed or implied by
those forward-looking statements will not be realized.
ADDITIONAL INFORMATION
In connection with the proposed spin-off it is currently expected that IAC will
file a proxy statement/prospectus with the SEC. Stockholders of IAC are urged to
read the proxy statement/prospectus, when it becomes available, because it will
contain important information about IAC, the proposed spin-off transaction and
related matters. Investors and security holders can obtain free copies of the
proxy statement/prospectus when it becomes available by contacting Investor
Relations, IAC/InterActiveCorp, Carnegie Hall Tower, 152 W. 57th Street, 42nd
Floor, New York, NY 10019 (Telephone: (212) 314-7400). Investors and security
holders can also obtain free copies of the proxy statement/prospectus and other
documents filed by IAC and Expedia with the SEC in connection with the proposed
spin-off transaction at the SEC's web site at WWW.SEC.GOV.
In addition to the proxy statement, IAC files annual, quarterly and current
reports, proxy statements and other information with the SEC, each of which
should be available at the
5
SEC's web site at WWW.SEC.GOV. You may also read and copy any reports,
statements and other information filed by IAC at the SEC public reference room
at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information.
IAC and its directors, executive officers and certain members of management and
other employees may be deemed to be participants in the solicitation of proxies
of IAC's stockholders to approve the proposed spin-off transaction. Such
individuals may have interests in the transaction as described herein, including
as a result of current holdings of options or shares of IAC's stock and future
holdings of options or shares of Expedia's stock, which will be impacted in the
transaction. Information regarding IAC and the equity interests of its directors
and officers who may be deemed to be participants in the solicitation of proxies
is contained in IAC's proxy statement, filed with the SEC on April 29, 2004.
As filed with the SEC December 21, 2004.
6
Exhibit 99.3
Filed by IAC/InterActiveCorp
Pursuant to Rule 425
Under the Securities Act of 1933
Deemed filed and Rule 14a-12
Under the Securities Exchange Act of 1934
Commission File No. 0-20570
EMPLOYEE Q&A: IAC PLAN TO SEPARATE INTO TWO COMPANIES
December 21, 2004
We announced today a plan to separate IAC/InterActiveCorp into two publicly
traded companies, one holding travel-related businesses, which will be named
Expedia, and the other holding IAC's remaining businesses, which will retain the
name IAC. References below to Expedia or IAC are to the companies after the
transaction.
1. HOW WILL THE TRANSACTION AFFECT MY EMPLOYMENT?
We expect you will continue to be employed by the business you currently
work for, subject to the same terms and conditions that exist today.
2. WHAT HAPPENS TO MY EMPLOYEE EQUITY?
o We expect your restricted stock units ("RSUs") will become RSUs of
IAC or Expedia depending on the business you work for. The number
of RSUs you hold will be adjusted so that their value right after
the transaction will be the same as their value right before the
transaction, and they will have identical vesting terms and
otherwise be consistent with the existing terms of your RSUs.
o We expect any vested and unvested employee stock options you hold
will become options of either IAC or Expedia depending on the
business you work for. As part of the transaction, there will be
adjustments to the number of shares that may be acquired upon
exercise of each option and to the exercise price so that the
intrinsic value of the option right after the transaction will be
the same as the value right before the transaction. Each adjusted
option will have identical vesting terms, and otherwise be
consistent with the terms of your existing stock option.
3. WHAT HAPPENS TO THE EMPLOYEE WARRANTS HELD BY EXPEDIA EMPLOYEES?
They will be treated the same as all other IAC warrants. The exact
mechanics are still under discussion, but we expect warrants to be
exercisable for shares of both IAC and Expedia pursuant to the terms of the
security.
4. WHAT HAPPENS TO MY PARTICIPATION IN THE IAC 401(K) PLAN AND MY ACCOUNT
BALANCE?
If you participate in the IAC 401(k) plan, and your business remains with
IAC, your participation will continue. If you participate in the IAC 401(k)
plan, and your business is
part of Expedia, your IAC 401(k) plan account balance and any outstanding
loans will be transferred over into a new Expedia plan. We'll keep you
informed as the 401(k) plan transition progresses.
5. WHAT HAPPENS TO MY BENEFITS?
We do not expect any change to your benefits. IAC employees will remain in
the IAC plans and Expedia employees will transition to Expedia plans. We'll
keep you informed as the health and welfare benefits transition progresses.
Information presented in this document is intended to communicate certain
information to employees of IAC and its businesses in connection with the
announced transaction whereby IAC will be split into two companies, Expedia and
IAC. Nothing in this document shall confer upon any employee any right to
continue in the employ of IAC or any of its businesses or interfere in any way
with the right of IAC or any such business to terminate the employees employment
at any time.
ADDITIONAL INFORMATION
In connection with the proposed spin-off it is currently expected that IAC will
file a proxy statement/prospectus with the Securities and Exchange Commission
(the "SEC"). Stockholders of IAC are urged to read the proxy
statement/prospectus, when it becomes available, because it will contain
important information about IAC, the proposed spin-off transaction and related
matters. Investors and security holders can obtain free copies of the proxy
statement/prospectus when it becomes available by contacting Investor Relations,
IAC/InterActiveCorp, Carnegie Hall Tower, 152 W. 57th Street, 42nd Floor, New
York, NY 10019 (Telephone: (212) 314-7400). Investors and security holders can
also obtain free copies of the proxy statement/prospectus and other documents
filed by IAC and Expedia with the SEC in connection with the proposed spin-off
transaction at the SEC's web site at WWW.SEC.GOV.
In addition to the proxy statement, IAC files annual, quarterly and current
reports, proxy statements and other information with the SEC, each of which
should be available at the SEC's web site at WWW.SEC.GOV. You may also read and
copy any reports, statements and other information filed by IAC at the SEC
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information.
IAC and its directors, executive officers and certain members of management and
other employees may be deemed to be participants in the solicitation of proxies
of IAC's stockholders to approve the proposed spin-off transaction. Such
individuals may have interests in the transaction as described herein, including
as a result of current holdings of options or shares of IAC's stock and future
holdings of options or shares of Expedia's stock, which will be impacted in the
transaction. Information regarding IAC and the equity interests of its directors
and officers who may be deemed to be participants in the solicitation of proxies
is contained in IAC's proxy statement, filed with the SEC on April 29, 2004.
2
Exhibit 99.4
Filed by IAC/InterActiveCorp
Pursuant to Rule 425
Under the Securities Act of 1933
Deemed filed and Rule 14a-12
Under the Securities Exchange Act of 1934
Commission File No. 0-20570
To: Employees
From: Barry Diller
Subject Line: IAC/Expedia
ATTACHMENT: 1
- --------------------------------------------------
We're announcing today a major change...the separation of IAC into two publicly
traded companies: Our travel businesses will form one company called Expedia;
our non-travel businesses will be called IAC.
The attached press release and shareholder letter have the detail and
explanation. There are a few points I want to emphasize:
First, I'm completely convinced that this is the right course for all of us. It
will result in a focused and nimble travel company with the full flexibility to
do whatever's necessary to compete and win in the ongoing evolution and likely
consolidation in travel. And it will result in a diversified interactive
commerce company called IAC, with our non-travel businesses out from under the
shadow of travel and better able to shine, and the enterprise more strongly
positioned to pursue new opportunities where they arise. The core realization
underlying our decision was simply this: greater value can be created in this
new configuration than any other.
Second, it's the hard and excellent work of all of you throughout IAC that
brought us to the point where we can unlock the value from the two great
companies now inside of us...the employees who built our travel businesses to a
size and strength where they can and should be unleashed as a stand-alone, and
the employees who built our non-travel businesses to a size and strength where
they can and should stand on their own in pursuit of the opportunities ahead.
It's a happy fact for me that I'll continue to be fully involved with both
companies, as CEO at IAC and as Chairman at Expedia.
Third, at both IAC and Expedia we'll continue to take every advantage from the
collection of businesses under each roof -- people movement; exchanging best
practices and lessons learned; cost savings from strategic sourcing and other
initiatives; sharing traffic and other beneficial inter-company arrangements.
We've made real progress here since the buy-ins of our public subsidiaries...and
we should continue to do so in each house, while also, in finalizing the split,
putting in place strong commercial relationships between IAC and Expedia and
preserving as much as we practically can of the inter-company benefits and
arrangements now in place between our travel and non-travel businesses.
This is big news and I don't doubt you'll have many thoughts and
questions...most hopefully addressed in the attached, and any others to be
addressed in the period ahead together with the leaders of each of your
businesses. This is a decision that was made after significant thought and
deliberation with my colleagues in New York and our Board of Directors, which
led us to
the firm realization that we're doing the right thing for us all...I'll leave
you with the last graph of my shareholder letter since it pertains to you more
than anyone:
"Often the most obvious solutions are elusive, and this one came upon us,
first as a revelation that instinctively seemed just right - both freeing
and energizing, followed by an intensive examination to find any flaw - and
then, after finding none, a great desire to get on with it. Now, having
made the announcement in the ending days of 2004, all my colleagues will be
organizing themselves to start the new year with a fresh, clear and
invigorating mandate for the future - as good a holiday present as we could
hope to give to ourselves and our shareholders."
So, to the happiest of holidays for you and your families...and my best wishes
for the new year.
Barry Diller
ADDITIONAL INFORMATION
In connection with the proposed spin-off it is currently expected that IAC will
file a proxy statement/prospectus with the Securities and Exchange Commission
(the "SEC"). Stockholders of IAC are urged to read the proxy
statement/prospectus, when it becomes available, because it will contain
important information about IAC, the proposed spin-off transaction and related
matters. Investors and security holders can obtain free copies of the proxy
statement/prospectus when it becomes available by contacting Investor Relations,
IAC/InterActiveCorp, Carnegie Hall Tower, 152 W. 57th Street, 42nd Floor, New
York, NY 10019 (Telephone: (212) 314-7400). Investors and security holders can
also obtain free copies of the proxy statement/prospectus and other documents
filed by IAC and Expedia with the SEC in connection with the proposed spin-off
transaction at the SEC's web site at www.sec.gov.
In addition to the proxy statement, IAC files annual, quarterly and current
reports, proxy statements and other information with the SEC, each of which
should be available at the SEC's web site at www.sec.gov. You may also read and
copy any reports, statements and other information filed by IAC at the SEC
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information.
IAC and its directors, executive officers and certain members of management and
other employees may be deemed to be participants in the solicitation of proxies
of IAC's stockholders to approve the proposed spin-off transaction. Such
individuals may have interests in the transaction as described herein, including
as a result of current holdings of options or shares of IAC's stock and future
holdings of options or shares of Expedia's stock, which will be impacted in the
transaction. Information regarding IAC and the equity interests of its directors
and officers who may be deemed to be participants in the solicitation of proxies
is contained in IAC's proxy statement, filed with the SEC on April 29, 2004.
Exhibit 99.5
Filed by IAC/InterActiveCorp
Pursuant to Rule 425
Under the Securities Act of 1933
Deemed filed and Rule 14a-12
Under the Securities Exchange Act of 1934
Commission File No. 0-20570
To: IAC Travel Employees
From: Dara Khosrowshahi
Subject Line: IAC/Expedia
Everybody at IAC Travel,
I am extremely pleased to tell you that the IAC Travel companies will soon
become a separate, publicly traded company called Expedia and traded on the
NASDAQ. With the New Year will come a new beginning for Travel... one with its
inevitable challenges, but one in which we'll be positioned better than ever to
become the #1 provider of travel in the world.
I'm sure you have a lot of questions about how you'll be affected individually.
First, let me assure you that we're doing everything we can to make this
transition seamless with little, if any, impact at the operational level. Quite
simply, we expect people to continue to be employed by the business they work
for, at the same company locations. WE KNOW YOU WILL HAVE MANY QUESTIONS ABOUT
HOW THIS AFFECTS YOUR BENEFITS, STOCK, AND OTHER ASPECTS OF YOUR JOB. BE ON THE
LOOKOUT FOR ANSWERS TO THESE QUESTIONS IN THE COMING WEEKS.
I want to take this time to express how excited I am about this move and why I
believe that it's an incredibly positive thing for all IAC businesses.
Essentially, EXPEDIA will include all the domestic and international operations
associated with Expedia.com (including Expedia Canada, Newtrade Technologies and
Activity World), Hotels.com, IACT-Europe, IACT-Asia Pacific, Hotwire,
TripAdvisor, Expedia Corporate Travel, and Classic Custom Vacations. IAC will
include the domestic and international operations of all of the other IAC
businesses, including Ticketmaster, HSN, LendingTree, RealEstate.com Citysearch,
Entertainment Publications, Match.com, Precision Response Corporation, and
Interval International (Interval will be an IAC company because it is, at its
core, a membership and e-commerce exchange vs. a travel services company and
therefore it doesn't fit solely within the travel category).
Over the years since I've been involved with IAC, I have seen our travel
companies continuously innovate and execute on strategies that have literally
changed the nature of the travel industry. Something to truly be proud of. But
the online travel business has grown and matured since we entered it - and our
competitors are smarter than they ever have been. It's tempting when you are #1
(online at least) to become conservative, to play defense and try to protect
your lead. This announcement is all about playing offense - we are creating a
pure play online travel company that will be considerably attractive to
investors, provided of course that we execute effectively. We will also have the
flexibility that comes from having our own stock to capitalize on inevitable
market opportunities. And our equity and stock price performance will be
perfectly aligned with
our operational performance. We are raising the stakes here, and I am convinced
it's the right time to do so.
We certainly have our challenges but I believe we have so much more opportunity.
The drumbeat march of online adoption in the travel and tourism industry will
continue, domestically as well as globally where we are just getting started.
Competition will be fierce, and you can bet that we will face new entrants,
changing dynamics and totally unexpected twists and turns along the way. But
that is exactly what makes this opportunity so exciting - this global travel
marketplace is ours to win. Going forward, Expedia will be:
o The world's best collection of online travel brands... each leaders in
their category.
o The #1 online travel agency in the U.S., U.K., Canada and Germany. At
a $12.7 billion gross bookings run rate for the 12 months ended
9/30/04, we're on track to being the 3rd largest travel agency in the
world, tied with JTB (Japan), behind only TUI (Germany) and American
Express. I believe we can be the largest within five years, especially
as a pure-play travel company.
o The only online travel player with deeply established beachheads in
Europe and Asia... our international business is growing dramatically
and gaining share, and Expedia Europe is solidly profitable.
o The most extraordinary team of people in any business anywhere in the
world. We have outstanding talent at every level of the organization
and I believe that our people and our ability to innovate are our
not-so-secret weapon...we have to continue developing and training our
employee base and keep bringing world-class talent into our company,
at all levels.
I feel very fortunate to have the opportunity to lead what will be one of the
world's largest pure-play travel companies. I couldn't be more excited about our
future and I'm looking forward to building this enterprise with you.
Dara
ADDITIONAL INFORMATION
In connection with the proposed spin-off it is currently expected that IAC will
file a proxy statement/prospectus with the Securities and Exchange Commission
(the "SEC"). Stockholders of IAC are urged to read the proxy
statement/prospectus, when it becomes available, because it will contain
important information about IAC, the proposed spin-off transaction and related
matters. Investors and security holders can obtain free copies of the proxy
statement/prospectus when it becomes available by contacting Investor Relations,
IAC/InterActiveCorp, Carnegie Hall Tower, 152 W. 57th Street, 42nd Floor, New
York, NY 10019 (Telephone: (212) 314-7400). Investors and security holders can
also obtain free copies of the proxy statement/prospectus and other documents
filed by IAC and Expedia with the SEC in connection with the proposed spin-off
transaction at the SEC's web site at WWW.SEC.GOV.
In addition to the proxy statement, IAC files annual, quarterly and current
reports, proxy statements and other information with the SEC, each of which
should be available at the SEC's web site at WWW.SEC.GOV. You may also read and
copy any reports, statements and other information
filed by IAC at the SEC public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information.
IAC and its directors, executive officers and certain members of management and
other employees may be deemed to be participants in the solicitation of proxies
of IAC's stockholders to approve the proposed spin-off transaction. Such
individuals may have interests in the transaction as described herein, including
as a result of current holdings of options or shares of IAC's stock and future
holdings of options or shares of Expedia's stock, which will be impacted in the
transaction. Information regarding IAC and the equity interests of its directors
and officers who may be deemed to be participants in the solicitation of proxies
is contained in IAC's proxy statement, filed with the SEC on April 29, 2004.